Progress on Colombia, Panama trade deals

To facilitate U.S. free trade agreement (FTA) deal, Colombia agrees to "action plan" to protect worker rights.
Colombia, the third-largest economy in South America, imported some $12 billion of U.S. goods in 2010.
A U.S./Colombia FTA is expected to add an additional $1 billion annually to U.S. exports.

Following lengthy negotiations and the resolution of several sticking points, Congress may soon vote on long-delayed free trade agreements (FTAs) with Colombia and Panama.

During a Wednesday press conference, U.S. Trade Ambassador Ron Kirk said the Colombian government had agreed to a series of steps – outlined in an “action plan” -- to ensure worker rights, the end of anti-union violence and other issues.

Colombia, the third-largest economy in Central- and South America, “is one of our most strategic partners in the region,” said Kirk. “We think the opportunity to reduce barriers to U.S. exports will create new opportunities for American business and, thereby, support better jobs for Americans.”

An example: in 2010, U.S. exports in goods to Colombia amounted to $12 billion. Under an FTA, the International Trade Commission “estimates the tariff reductions … will allow us to expand that by another $1 billion.

“Under the agreement, over 80 percent of U.S. exports of consumer and industrial products will become duty-free immediately. The remaining tariffs will be phased out over 10 years. In terms of agricultural commodities, more than half of our current farm exports to Colombia will become duty-free immediately with the balance to be eliminated over the next 15 years.”

Earlier this year, President Obama directed Kirk’s office, “to intensify our engagement with Colombia” and deal with “issues and concerns expressed by many in Congress and around the country” regarding labor violence and the administration of justice in the country.

Obama “made it clear that as much as we believed in the economic imperative and opportunity to the United States through the FTAs with Colombia, we also thought it important that we demonstrate to the American public our resolve to have FTAs that reflect our values as to how workers should be treated.

“In that vein, we’ve had … very intensive engagement with the government of Colombia. As a result of that intensive work, we’ve reached an agreement on what we’re calling an ‘action plan’ related to labor rights that outlines a number of steps the government of Colombia has agreed it will undertake over the next several weeks and months. That, we think, puts us in a position to begin discussions with Congress on moving forward with the FTA.”

The plan, said Kirk, “significantly expands the protection for labor leaders and union organizers. It bolsters efforts to hold accountable and punish those who have perpetrated violence against union members. And it makes a number of important steps to strengthen labor laws and enforcement.”

The government of Colombia has approached the trade deal “in a pro-active way and has already taken some steps,” said Michael Froman, Deputy National Security Adviser for International Economics. “Included are discussions about land reform, victim reparation, government reorganization.

“The ‘action plan’ is a series of incremental, additional steps we’ve been able to reach with the Colombians that adds specificity and detailed actions in three areas: labor law, labor violence and impunity. We’re comfortable this package represents a fulsome approach to dealing with those issues.”

Colombian President Juan Manuel Santos, currently in the United States for an appearance at the United Nations, is expected to travel to Washington on Thursday to meet with President Obama. “We anticipate the two will approve the action plan,” said Kirk.

Panama/South Korea

As for the Panama FTA, over the last several weeks, the United States reached agreement with the nation “about actions they agreed to take in both labor and tax” provisions, said Froman. As of Tuesday, “those labor provisions are now law in Panama and they’ve submitted the tax information exchange agreement to their congress for ratification, which we expect to happen in the coming days.”

Struck in early March, a U.S./South Korea FTA is also awaiting further action.

Kirk discounted any claim that U.S. jobs would be threatened by a Colombia FTA. “We can make an honest case that because Colombia has been a part of our preference program through the Andean Trade Preferences Act” -- enacted in December 1991, the act aims to assist Bolivia, Colombia, Ecuador, and Peru in a shift from drug production to economic alternatives -– “the impact (of a FTA) on American jobs should be accretive and positive.”

Because Congress has historically supported extended preference to Colombia “as a way of helping them move people from, frankly, trafficking in drugs to farming and other (employment), we have the unique circumstance where most of what is sold in the United States from Colombia comes in duty-free. So, this FTA is (the United States’) opportunity to bring Colombia’s tariffs down. … This should be no threat to American jobs since goods from Colombia already come into the United States duty-free.”

The National Corn Growers Association is among those enthusiastic about the trade deal. In a statement, the NCGA claimed the FTA would provide immediate access for U.S. corn growers to Colombia’s roughly 2.1 million metric ton market for corn at zero percent duty.

“Colombia has traditionally been one of the top ten export markets for U.S. corn,” said Bart Schott, NCGA President – who also endorsed the Panama and South Korea deals. “This is an important market for U.S. farmers and we do not want to watch this market slip away to our largest competitors. America’s corn producers stand ready to produce enough corn to meet the increasing global demands for food, feed, fuel and fiber.”

The American Soybean Association was equally “pleased that agreement has been reached on labor and judicial reforms that will pave the way for Congressional approval of the long-pending U.S.-Colombia FTA, a deal that has been awaiting action for more than four years,” said ASA President Alan Kemper, a soybean producer from Lafayette, Ind. “As a result of delays in approving the pending FTA, the U.S. has lost market share to competitors in Colombia. In 2010, U.S. soybean product exports to Colombia were valued at $103 million, down 64 percent from 2008.”

U.S. wheat producers “need” the Colombia FTA to compete, said Wheat Growers President Wayne Hurst and U.S. Wheat Associates Chairman Don Schieber in a joint statement. “Argentine wheat enjoys trade preferences under the Mercosur agreement. Canada and Colombia have ratified a separate FTA that will eliminate import tariffs on Canadian wheat and most other agricultural goods likely by July of this year. When that happens, the existing tariff and price band system applied to U.S. wheat imports will, in effect, make Canadian wheat significantly cheaper than U.S. wheat. As a result, Colombian millers who want to keep buying U.S. wheat would be forced buy more wheat from Canada because of the significant tariff disadvantage alone. The U.S.-Colombia FTA would remove that barrier.”

The U.S. Grains Council also favors the FTA. “In light of today’s good news, I am hopeful Congress will be able to ratify this much needed agreement with Colombia in the near term,” said Thomas Dorr, USGC President and CEO. “The Council, U.S. producers and agribusinesses look forward to a strong trade relationship with Colombia.”